Profitability of Listed Food and Beverage Firms in Nigeria: Inventory Flow Management Impact Analysis
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Inventory management seeks to promote industrial efficiency through planning, coordinating, controlling and organizing of appropriate levels of raw materials, work-in-process, and finished goods. This minimizes cost associated with ordering, holding, and stock-out; and ensures reliable sales forecasts, provided usage of stored product is steady and annual demand requirements are known, among other assumptions. For this significance, the purpose of this study is to examine the extent to which inventor flow management impacts profitability of listed food and beverage firms in Nigeria. Secondary data covering five years (2013-2017) were gathered from annual reports of the firms, and analysed using descriptive and inferential tools, aided by Statistical Package for Social Sciences (SPSS). With Economic Order Quantity (EOQ) and Return on Assets (ROA) as operational dimensions, the results indicated a correlation coefficient (R) of 0.575; and coefficient of determination (R2)of 0.331, which attributes 33.1% variations in ROA to changes in EOQ. Also favourable are Durbin-Watson statistic of 1.667 (1.5 < d-w < 2.5) and other features of the model (β = 575, T-value = 2.722, p-value = 0.016 < 0.05). Based on these results, the null hypothesis is rejected, in favour of the alternative hypothesis which states that EOQ significantly impacts ROA. The study, therefore, concludes that inventory flow management significantly impacts profitability of listed food and beverage manufacturing firms in Nigeria. In the light of the conclusion, it is recommended that managers of the listed firms should sustain EOQ-based practices and promote cost management principles to boost industrial productivity and profitability.
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